Clive Bredenkamp, IT Executive at e4 Strategic, recently shared his insights on how technology is revolutionising the property market for both buyers and banks.
With over 20 years of experience, including designing South Africa’s first digital home loan switch system, Bredenkamp is well-versed in the industry’s technological advancements.
Bredenkamp said that home-buyer expectations have evolved significantly in recent years. Buyers now demand faster, more efficient processes and better client experiences.
The digitisation of the home loan process, which is now approximately 98% digital, has played a crucial role in meeting these expectations.
There’s a good chance that you’ve signed for your home electronically over the past five years, speeding up the process dramatically, he noted.
Key technologies are enabling banks to offer superior property financing products.
The digitisation of the home loan process has significantly accelerated the time it takes to register a property.
Currently, it takes approximately 60 days to complete the registration. Each additional day in this process costs banks around R12 million in lost interest revenue due to delayed early revenue recognition.
The exciting challenge lies in reducing this 60-day period, which could lead to substantial financial benefits for banks, said Bredenkamp.
The onboarding process has also seen dramatic improvements, making it more efficient and user-friendly. Traditionally, South Africa had six major home loan banks. However, the market has recently seen the emergence of new lenders like Discovery and Capitec.
These new players are innovating by gamifying home loan rates, offering unique incentives such as better rates for healthy living, to attract customers to switch their bonds.
Achieving a 1% reduction in interest rates is challenging but highly impactful. For a R2 million home loan, a 1% reduction translates into significant savings, making it an enticing option for consumers who are often financially stretched.
Clients now expect a seamless, always-on platform experience with competitive real-time rates.
Bond switching, while still uncommon in South Africa, is becoming more prevalent thanks to these emergent lenders. In the UK, home loans are typically switched three to four times over the bond’s lifespan.
South Africa is beginning to see a similar trend, although the high cost of switching remains a barrier. Customers often prefer to keep all their financial products with one bank to maximize rewards, but a better rate offering can persuade them to switch.
Bredenkamp also discussed recent economic improvements, such as controlled load shedding, favourable elections, and stabilised inflation.
He mentioned the potential for interest rate cuts in the coming months, which could positively impact home loans. “We are seeing the start of a downward cycle, which is fantastic for the economy and for buying,” he said.
"We have indications of an interest rate cut coming in September...a cut in November, and potentially two next year."
In summary, the technological advancements in the property market are not only enhancing the efficiency of the home loan process but also providing consumers with better options and experiences. As the market continues to evolve, both buyers and banks stand to benefit from these innovations.
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